TEXT OF EXPERIMENTAL INSTRUCTIONS (SHOWN ON SCREEN IN LAB).

Samples of screen-shots included in instructions can be viewed at

http://www.appstate.edu/~dickinsondl/instructions.html

General Instructions: Player A (Player B)

This is an experiment in decision-making. Please read the following instructions carefully. The amount of money that you earn in this experiment will depend, in part, on your decisions as well as the decisions of the person with whom you will be randomly matched.

You have been randomly assigned as a Player A (Player B) in this experiment. You and a randomly chosen counterpart will be given a fixed amount of time in a decision-making round to mutually agree upon the size of a variable, X.

[two-minute time limit announced by experimenter]

Your range of possible X values lies from 200 to 700 (300 to 800) in increments of one (this may not be the same range as that for your counterpart). The value of X at the end of the round will determine your cash earnings for that round. As a Player A (Player B), your cash earnings for any given round are largest (smallest) for smaller values of X. Similarly, your cash earnings for any given round are smallest (largest) for larger values of X. You will be given a payoff sheet that translates the different values of X into earnings in cents. (Player B earns more for larger values of X). Please study this payoff sheet carefully so that you fully understand how your earnings will vary given the different possible values of X.

[payoff sheets handed out by experimenter]

If you and your counterpart can mutually agree upon the size of X for that round, then you can look to your payoff sheet to determine how much you will receive for that round. In a few moments we will discuss what will happen should you and your counterpart not be able to come to an agreement by the end of the allotted time.

Your interaction with your counterpart will only be through the computer

terminal. You will never know the identity of your counterpart and your counterpart will never know your identity. You are matched with the same counterpart for the entire experiment.

The next screen will show you the environment in which you will interact with your counterpart. If at any point during the instructions you have a question, please raise your hand so the experimenter can help you.

In your interactions with your counterpart, you will submit your proposal for the size of X on this screen

[sample screen picture]

To enter a proposal for X, click on the “New Offer” box, enter a proposal for X and then hit “Offer”. Note: The sample screens are based on player A’s point of view.

At this point, Player B will see Player A’s current proposal and may or may not accept it. Player B can similarly make proposals that Player A sees in the counterpart’s box at the right of the screen. Suppose that Player B wishes to propose X=600 rather than accept Player A’s current offer.

[sample screen of offer]

In this example, Player B’s proposal is seen to be X=600. This is listed as his/her current offer. Player A may accept the current offer at any time by clicking the “Agree” button.

If you accept the current offer of your counterpart, the round would be over. You may, however, choose to not accept the current offer. You can update your current offer by increasing or decreasing it, and your counterpart can also update his/her offer. After updating an offer, it will be reflected in your offer box. Only current offers (offers at the top of the list) can be accepted. Even though offers can be updated at any time, it may be wise to give the other Player a few moments to either accept your offer or update his/her offer.

Suppose that you did not accept the proposed offer and you enter another offer. [sample screen of a new offer]

At this point, your counterpart will see your current proposal for 349 [in this example] as well as all previous proposals for this round. However, only X=349 will be listed as the current offer. As such, your counterpart may now choose to either accept your proposal or update his/her proposal. Let’s suppose that your counterpart choose to accept your proposal at this point.

[sample screen of offer acceptance]

Your counterpart has accepted your offer, and so X=349 for that round. Once the round is over, either another round of similar interactions will occur, or instructions will follow to indicate the differences in the subsequent round(s). You will be asked to indicate when you are ready to continue with the experiment.

The computer will keep track of your cumulative experimental earnings and post them on your main computer screen. You will also have a timer on the screen to let you know how much time is left in a particular round. Please take a moment to locate these information items on your screen once bargaining begins.

The next several screens will inform you as to what will happen should you not come to an agreement within the time limit.

Treatment Instructions: NA

For the next several rounds, there will be a particular procedure used to deal with the possibility that you and your counterpart may not reach an agreement by the end of the round. Should you reach the end of the round without having mutually agreed upon a value of X, you will both receive $0 for that round. This does not affect any of your previous earnings, nor does it apply to future earnings (future rounds of the experiment).

It is important for you to understand this rule. The screen below shows you what you would see if the round were to end in this scenario.

[sample screen of round ending without agreement]

This procedure of dealing with no agreement at the end of the round will continue until you are otherwise notified. When you have finished the last round of this

procedure, you will be notified through the instruction boxes on your computer screen. If you have any questions before starting this set of rounds, please raise your hand now. Otherwise, click below to start.

Treatment Instructions: CA

For the next several rounds, there will be a particular procedure used to deal with the possibility that you and your counterpart may not reach an agreement by the end of the round. Should you reach the end of the round without having mutually agreed upon a value of X, the computer will generate a value of X for you. Some values of X are more likely to be chosen than others, but there is a random element to the computer’s choice. Whatever value of X the computer randomly generates, that will be the value of X used to determine both your and your counterpart’s payoffs for that round. To give you some information about this random number generation procedure, the next screen will show you the last 100 values of X generated by the exact same method that will be used in your case (should you not reach an agreement prior to the end of the round).

These are the last 100 values of X randomly generate by the computer (The order in which they are shown is irrelevant). This should be used to give you an idea of more likely and less likely values of X.

[sample 10x10 table of 100 X-values drawn from appropriate distribution (no decimals)]

If you have not reached an agreement by the end of the round, the same random number generation procedure that generated these 100 values of X will be used to determine your value of X for that round. If you have any questions before starting this set of rounds, please raise your hand. Otherwise, click below to start.